SAN FRANCISCO (Reuters) Twitter Inc ( TWTR.N ) reported fewer monthly active users than analysts expected and warned that the carefully watched figure could continue to fall as it erases fake accounts, Shares stocks sharply lower in early trading.
PHOTO PHOTO: People with mobile phones are silhouette against a backdrop projected with the Twitter logo in this illustration shot September 27, 201
The company said the work it made to clean up Twitter by clearing automated and spam accounts had some impact on their user statistics in the second quarter and that it would prioritize work to improve suspicious accounts and reduce hate spread and other offensive content over projects that could attract more users.
Monthly active users dropped by 1 million in the second quarter from the first to 335 million. Analysts had expected a gain of 1 million users and the results could cure concerns that Twitter lacks a clear strategy to address various platform issues and increase usage and revenue together.
Twitter said the decline in the third quarter would be in the middle-digit million, suggesting a sequential decline to around 330 million users. Analysts had averaged 340 million monthly active users in the third quarter, according to Thomson Reuters I / B / E / S.
Twitter shares fell 16 percent in pre-trading.
Twitter, as a major competitor Facebook Inc. ( FB.O ), has been under pressure from regulators in several countries to eradicate hate speech, violent content and misinformation, better protect user data and increase transparency on political advertising .
"We take active decisions to prioritize health initiatives over long-term product improvements that can drive more use of Twitter as a daily tool," the company said in a shareholder letter following the results.
Chief Executive Jack Dorsey said in a statement that daily users grew 11 percent compared to a year ago saying that addressing "problem behavior" was making the service a daily tool.
The company did not reveal the number of daily users.
Twitter had said earlier in July that deletion of fake accounts would not have a major impact on monthly users since the purge focused on inactive accounts, a key investor and advertiser statistics. Twitter's relationship with advertisers has been strained by concerns about fake accounts purchased by users to increase their subsequent.
Revenue of $ 711 million, mainly from advertising and up 24 percent from last year, exceeded the average estimate of $ 696 million among analyst research gathered by Thomson Reuters.
Twitter said it took advantage of two weeks in the FIFA World Cup in the second quarter, with ads related to the football tournament that generated $ 30 million in revenue.
The result was $ 100 million, with an increase of $ 42 million due to a tax change. Twitter has won its first time in the fourth quarter of 2017 and has been profitable ever since, but warned in the quarter if revenue growth will slow this year and costs will rise.
Profit excluding items was 17 cents per share, in line with analysts estimates.
Twitter has said increased video programming, including news shows and live sports, and investing in technology that automatically exceeds interesting content with limited user intervention should make the service appealing to first-time travelers.
Twitter said that it lost some users due to the introduction of the General Data Protection Regulation in Europe in May, but it did not notice any revenue effect.
Twitter also saw usage fall after saying that it would not subsidize users who had access to the application via text messages without paying a message fee to wireless operators.
The company increased its projections for the year to between $ 450 million and $ 500 million, from $ 375 million to $ 450 million, as it extends and upgrades the computer's infrastructure that is the basis of the service.
The costs associated with licensing of video and automation of user data increased general expenses 10 percent to 631 million dollars in the second quarter compared to one year ago.
Reporting by Paresh Dave; Writing by Meredith Mazzilli; Editing by Peter Henderson, Edmund Blair and Nick Zieminski